Explained: Why gold, silver ETFs jumped even after a recent sell-off

Gold and silver exchange-traded funds (ETFs) surged in Monday’s (Februray 9’s) trade, tracking a strong rebound in precious metal prices after days of sharp volatility and a recent sell-off in bullion markets.

The recovery was particularly strong in silver-linked ETFs, which mirrored the outsized bounce in silver futures, while gold ETFs moved higher at a steadier pace.

The gains come against a backdrop of robust investor interest in gold funds — India’s gold ETFs attracted $2.49 billion in net inflows in January 2026, up 98% from $1.25 billion in December, according to the World Gold Council (WGC).
January marked the eighth straight month of inflows, underlining sustained demand despite price swings.

What happened in futures markets?

Gold futures with April expiry climbed nearly 2% in morning trade to around ₹1.58 lakh per 10 grams, while June contracts also gained about 2%.

Silver futures showed even sharper momentum — March contracts jumped around 6% to about ₹2.64 lakh per kg, while May contracts were up nearly 4%.

The steeper move in silver reflected its dual role as both an industrial metal and a financial asset, making it more sensitive to shifts in sentiment and positioning.

How did ETFs perform?

Silver ETFs led the rally:

• UTI Silver ETF rose over 11% to ₹252.08
• Nippon India Silver ETF (Silver BeES) gained more than 10% to ₹247
• HDFC, Tata, Zerodha, SBI, Aditya Birla, DSP, Kotak, Groww and ICICI Prudential Silver ETFs were up between 7–10% in early trade

Gold ETFs moved higher in line with bullion:

• Union Gold ETF and Angel One Gold ETF jumped over 3%
• 360 ONE, LIC MF, Kotak, Motilal Oswal, Nippon India and SBI Gold ETFs climbed around 3%
• Zerodha, HDFC, Axis and UTI Gold ETFs added more than 2%

Why has there been so much volatility?

Precious metals experienced a sharp correction earlier in February after a blockbuster January rally. Three main factors drove the turbulence:

• Higher trading margins: CME Group raised margin requirements for gold and silver futures, forcing leveraged traders to cut positions — accelerating a sell-off.
• Stronger US dollar: The dollar rebounded after markets viewed U.S. President Donald Trump’s nomination of Kevin Warsh as a more hawkish signal for the Federal Reserve. A stronger dollar typically pressures gold and silver.
• Profit-booking after record gains: After a stellar start to 2025 — especially for silver — traders locked in profits, amplifying price swings.

Despite the pullback, silver remains one of the best-performing assets of 2025 so far, up roughly 50–60% year-to-date, supported by industrial demand, supply tightness, and safe-haven buying.

What do ETF flows signal?

The surge in prices and ETF performance aligns with strong underlying demand:

• India’s gold ETF inflows hit $2.49 billion in January, the highest in months
• This marked a 98% jump from December

January extended a run to eight consecutive months of net inflows, showing investors continue to treat gold as a hedge amid global uncertainty.

Analysts say this suggests that while short-term prices can be volatile, strategic allocation toward gold remains intact.

What should investors watch now?

Gold is likely to remain sensitive to US inflation data, Federal Reserve policy expectations, and dollar movements. Silver may see sharper swings given its industrial exposure.

For investors:

• Gold ETFs continue to serve as a defensive hedge.
• Silver ETFs remain a higher-risk, higher-reward play tied to both markets and manufacturing demand.